Judge fails to find merit in owner's argument against Muskego

Muskego - A $46 million lawsuit against the city in connection with the former Parkland Mall property was dismissed by Waukesha County Circuit Court Judge Lee Dreyfus Jr. on Feb. 20.

He denied all the claims in the 2009 lawsuit, which contained allegations stemming from 1997.

The lawsuit filed by Parkland Venture, LLC, which owns the former mall property, alleged that, because Muskego would not let Parkland Venture do what it wanted to with the former shopping mall property, the city had virtually taken the land without paying for it.

The judge found the claims lacked merit.

The Parkland Mall property, located at Janesville Road and Lannon Drive, is about 10.8 acres.

Owners of the former mall property have between 45 and 90 days to appeal, depending on when the court enters the judgment.

Differing reactions

"It was a good and right decision for the city and the taxpayers," Muskego Mayor Kathy Chiaverotti said.

Attorney Remzy Bitar, who represented the city, said the decision reflected the judge's view that city officials had acted reasonably and within their rights to monitor land development and public money.

But attorney Thomas Reynolds, who represented Parkland Venture and its primary investor, Arthur Dyer, said, "It's not a good decision for the city because the land still exists in the same form as it did in the past."

He said Parkland Venture will pursue all the remaining legal remedies available, including an appeal.

"We believe there were significant errors in the summary judgment," Reynolds said.

Chiaverotti agreed that the decision doesn't change the status of the property that has stood vacant in the heart of Muskego for years.

But city officials want it developed.

"We'll continue to work with any property owner or any developer who submits a development proposal," Chiaverotti said.

She is hopeful the city and mall owners can move on now, she said.

Long, storied history

People have been trying to do that since 1997, when Parkland Venuture bought the closed mall for $850,000. In his lawsuit, Dyer said he originally intended to gut the mall and remodel it both inside and out, offer it for a new Muskego library and rent out the rest for retail.

But about a month into the interior demolition, state health inspectors called the mall a potential health hazard due to water that had leaked through the roof, causing the growth of an air-borne fungus that could be dangerous for employees to inhale.

That same year, Menard's looked at the site for a possible home improvements store. But it dropped the idea, deciding the site was too small.

Meanwhile, city officials had been pushing Dyer to repair or raze the old mall building.

Dyer started tearing it down in March 1999, but stopped.

In July 2000, he proposed a $20 million development with stores, a restaurant and 60-unit senior housing facility. To help make the redevelopment happen, the city created a special taxing district designed to promote redevelopment. The city offered $2.8 million to do street improvements, stormwater management improvements and provide nearly $1 million in development incentives for extra amenities such as underground parking. The city's investment would have been entirely paid back by taxes from the new development.

That proposal fell through and the rest of the mall was down by the end of 2000.

New guidelines at issue

In late 2003, the city approved new development guidelines that Dyer said in his lawsuit made it economically infeasible for him to build Beacon Square, a 140-condominium project with commercial retail and a downtown center that he proposed in April, 2004.

The city offered help in the form of $6.9 million, but Dyer said the project needed more to get off the ground.

At year's end, he was planting trees on the property, turning it into what he called a Christmas tree farm. As agricultural property, he slashed property taxes on the land to less than $50 a year.

His lawsuit claimed he qualified for $16 million in city investment through the special taxing district for development. Not only did he not get it, but in 2006, the city changed its eligibility requirements for such investments and Parkland Mall didn't qualify anymore, the lawsuit alleges.

Hope for development emerged the next year when a group of buyers offered $8.1 million for the property. Ener-Con Companies wanted to build $35 million to $40 million worth of retail and condominium space. But by late summer 2007, the deal was off.

Soil tests showed the land could not support condos without an expensive fix. Another factor was that a $10 million city investment was requested, but the city was prepared to invest only $5.4 million.

Equal treatment?

Dyer alleged in his lawsuit that the city failed to impose the same strict guidelines that made it impossible to build at the Parkland Mall site on another new development in 2007.

The long history of the wrangle over the site also has included off-and-on efforts by the city to buy it.

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